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FCA: Legacy payment ban will improve competition

David Geale FSA 200

The FCA says the move to ban legacy payments from April 2016 is designed to improve competition between platforms.

Speaking to Money Marketing following the publication of its platform policy statement, FCA head of investment policy David Geale said making charges explicit would make it easier for clients to compare platforms.

Geale said: “We want the cost of using different platforms to be clear through explicit charges we want them to compete and clients to move between platforms on that basis. 

“We do not want a platform being funded partly on the basis of its legacy book and partly on an explicit charge and that is why we have set a date for everything to be moved into the same charging structure.”

Geale added that two years was sufficient time for all platforms to apply with the rules set out in the sunset clause.

“We wanted to have an end date so this does not go on for too long and we have given platforms that two-year period to get things done.”

Geale said the reason a de minimis cash rebate limit of £1 has been set is because that was the point when investors could not afford to be reinvested in units.

He also rejected the £1 limit was an acknowledgement the cash rebate ban was fundamentally flawed.

He said: ”From our discussions with the industry, it is clear that £1 is not sufficient to have any influence and you cannot effectively buy units from that.

“The cash rebate ban is in place to improve clarity of who is paying for what remove ability for product bias.”

Investment Quorum chief executive Lee Robertson says: ”I think competition will be improved as long as platforms can negotiate their own fund prices. If all funds are priced the same for all platforms then I think that damages competition.”

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